payday loan limits

TOPEKA - The dramatic growth in the number of payday lending businesses in Kansas has caught the eye of Rep. Clark Shultz, R-Lindsborg.Shultz, chairman of the House financial institutions committee, announced plans Thursday to kick off the legislative session next week with a new bill aimed at limiting such businesses' transactions to better protect consumers. Shultz said he's concerned about consecutive loans people are obtaining at several lending businesses. Kansas allows a maximum two payday loans of $500 or less for a 30-day period. Customers are charged $15 for each $100 borrowed, so a typical two-week loan of $500 will cost the borrower $75."Figured as an annual percentage rate the cost for credit is 391 percent," said Shultz in a press release. "Complaints have surfaced that customers find themselves in a downward financial spiral paying off old loans with new loans."A spokesman for Kansas' payday lending association, however, said recently that Kansas has plenty of controls in place already. Whitney Damron, an association lobbyist, said lawmakers have reviewed the issue before and found oversight to be adequate.But Shultz said he's writing a bill to prevent people from getting into a debt cycle of principal and interest fees that they can never pay off. He said it should be completed soon and ready for an early February hearing in his committee.Shultz, who knows of two payday lending businesses in his largely rural district, said multiple businesses have popped up across Kansas in recent years after lawmakers loosened interest restrictions."I'm not saying it's all bad and I'm not in support of useless regulation. If there's an emergency and someone's car breaks down, I can see the need," he said. "I just don't want people taken advantage of. It's easy in today's society to find yourself in trouble."Senate financial institutions Chairwoman Ruth Teichman, R-Stafford, said she too thought lawmakers should take another look at the short-term, high-interest loan businesses that now number about 436 in Kansas communities."The problem is people go from one to the next one to the next one and there's no central place for lenders to check and see how many loans a person has," Teichman said. "There needs to be some real-time reporting process. It's similar to what we're trying to do to assure people have car insurance."Teichman agreed that there are people who use payday loans, pay them off and don't get caught in a debt cycle.